Our Plan, Part XVII

When it comes to funding People, Ideas & Object and our user communities budget. There will be the laggard oil and gas companies that are, for whatever reason, unable to participate and carry their share of our budget. The same could be said for startup oil and gas producers. This should not be an impediment to progressing with software developments on September 4, 2017. It should also not be a situation where People, Ideas & Objects and the user community do not realize the full extent of their revenues.

Oil and gas producers have significant value that is not being captured by today’s organizations. This value is seeping out of the industry into the energy consumers pockets by way of low commodity prices. At the same time investors who have provided the financial resources for the capital in the industry are waiting for the day when they may see a return on that investment. This is all within the producer's control if they began using the Preliminary Specifications decentralized production model with its price maker strategy. With so much value to be gained by the oil and gas producers why is it always someone else that has to pay for the producers benefit. And as such I am unwilling to discount our budget for the makeup of any of the producers in the industry. Other producers who are set to gain, and gain consistently, should contribute more in order to compensate for the laggards and startups.

Last Thursday the World Energy Council published their 2017 report. Stating the following regarding North America.

While natural gas and oil continue to trade near historic lows (albeit creeping higher in the last year), energy infrastructure investments require long-term confidence in pricing. There remains a degree of doubt that the stability in commodity pricing will continue for the duration of those investments. The abundance of natural gas in the United States and Canada, however, has assuaged fears about energy security and commodity price risk based on foreign policy. 

Talent acquisition and retention will continue to be a focus for our industry in 2017. Like many industries that are transforming, the demand for top talent is critical as new opportunities and technologies continue to reshape the energy industry. Combined with generational turnover, energy leaders will continue to monitor this risk and be concerned about how to build the right teams required to achieve the transformational goals they have set for their organisations and the industry as a whole. 

Market design continues to be one of the critical uncertainties in the FELs [Future Energy Leaders] agendas with a lesser impact than the prior year but with a higher impact than the global monitor. In the FEL’s vision, to embrace new frontiers, FELs urge the need to adopt new business models by means of modern technology and innovation, implementation of the right policies and greater collaboration and engagement with customers. 

“Welcome to the party pal,” John McClain.

I find it interesting that these people have tied the low commodity prices with concern for the ability of the industry to provide a financial return to its investors. All throughout the time I’ve been doing this I’ve constantly been told by industry “leaders” that profits don’t matter, its cash flow. And I’ve argued that the accounting treatment of storing past production costs as property, plant and equipment on the balance sheet is a scam. In the World Energy Council’s report itself they state that half the costs of the energy infrastructure is attributable to oil and gas. Think about that for a minute and also understand that that infrastructure is aging rapidly and needs to be replaced or refurbished in the next 25 years. Where, or which investors will be scammed for that money?

The seriousness of this issue is captured by the World Energy Council. They state that commodity prices are the critical issue that the industry faces. The Preliminary Specification and our user community enable the price maker strategy that will allow the producers to return to profitable operations. To real profitable operations. Storing costs on the balance sheet is a fool's game played by fool’s. It doesn’t make you a better producer to have outsized balances of property, plant and equipment. It may, in this new environment that we are heading into, show that you don’t know what you're doing. Chevron is the worst culprit here. They have more than a quarter of a trillion dollars in property, plant and equipment, or 13 years worth of depletion. Why? How does this make them a better company? This only represents the amount that they’ve subsidized consumers for their energy costs. By not charging enough. If they treated those capital costs appropriately they would have written these costs off by this point. And in Chevron’s case, with only $145 billion in shareholders equity, that would have created massive losses for the past four decades. And hence why the producers use the accounting treatment that they do. The situation now is how do they reduce those balances of property, plant and equipment? And as an investor how should I assess a company's performance when they never made any money?

The scope of the problem is far worse than what the World Energy Council intimates in their report. We have a long and difficult road to travel in oil and gas. It’s not going to be good times. Only an extension of the bad times that we’ve experienced over the past few years. That is until we can fix this problem on an industry wide basis by implementing the Preliminary Specification, these difficulties will be the constant state of affairs. We can listen to the bureaucrats who assure us that it’s all under control, or realize in the mid to long run, changes need to be made.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Plan, Part XVI

The scope and scale of People, Ideas & Objects and our user communities Preliminary Specification is as broad as could possibly be considered. When we move to the Joint Operating Committee as the key organizational construct of the dynamic, innovative, accountable and profitable producer everything changes. Therefore the Preliminary Specification has had to design solutions for the necessary changes as a result of moving to that organizational construct. Why are we moving to the Joint Operating Committee? To achieve the alignment of the hierarchies compliance and governance frameworks with the legal, financial, operational decision making, cultural, communication, innovation and strategic frameworks of the Joint Operating Committee. When we do this we achieve a speed, innovativeness, accountability and profitability in our producer firms.

It would be my suggestion that when computers were being introduced in the 1960’s into oil and gas. The question became what will we do with them? Accounting became one of the natural uses for computers. Then taxes and the regulatory environment that exists to ensure overall compliance of the producer joined in. As people began their work with computers in oil and gas, the Joint Operating Committee faded into obscurity in terms of the accounting approach. Use of SAP today doesn’t even recognize the purpose behind having partners. The Joint Operating Committee is not in existence in any of the administrative or accounting applications that I’ve used in oil and gas. By adopting the Joint Operating Committee the Preliminary Specification requires that we approach the scope and scale of our application in the manner that we are.

Let's assume for a moment that I’ve convinced you that a move to the Joint Operating Committee is the necessary requirement to put the administrative and accounting functions in line with the rest of the oil and gas producer. This implies that the development of software to meet the needs of the industry is necessary. People, Ideas & Objects are promoting the Preliminary Specification as an inherent part of our Intellectual Property. Other ERP software vendors, therefore, need to come up with their own organizational construct to deal with the issues and opportunities that that software provider wanted to resolve. If an oil and gas producer is looking at the market for oil and gas ERP systems they know they’re going to have to review a certain number of specific items regarding each software provider, and I would hope that they would consider People, Ideas & Objects and our user community as part of their review.

The first item a producer is going to want to see is the underlying technologies and the base of the offering. There really are only two solutions in the market, Oracle and SAP. In oil and gas SAP has the majority of the oil and gas producers operating on their technology. Notice how it hasn’t had the positive effect in helping them profitably. Nonetheless People, Ideas & Objects are using Java, Oracle Database 12c and Oracle Fusion Middleware and Applications as the base of our application. These are the more robust technologies available in the marketplace with Oracle being a leader in their ownership of Java, the database and the recent writing of Fusion Middleware and Applications in Java from the ground up. Check for People, Ideas & Objects.

Next the producer is going to have to evaluate the ERP provider on the basis of their overall vision of the ERP systems offering. People, Ideas & Objects conducted the ten years of research that was necessary to determine what was required to use the Joint Operating Committee. The Preliminary Specification is the codification of that research and expression of that vision. I am not aware of any other vendor in the ERP marketspace that is selling any vision of a system that deals with the overproduction and oversupply issues. Nor do I know of any vendor offering a system that deals with the unique nature of the oil and gas industry. Most if not all of the others are all selling their products on the basis of a technology whiz bang feature that will make your eyeballs melt. If that were perceived to be a good thing. Check People, Ideas & Objects.

Next on the checklist of boxes to check is the user community involvement in the applications further development to meet the oil and gas industries requirements. It is here where People, Ideas & Objects have a substantial competitive advantage. Once the Preliminary Specification was published in final form in December of 2013 we commenced developments of our user community. Our user community vision and commitment is unparalleled and is represented in the three years that we’ve consistently developed our user community. Others may suggest that they’re user community based, however the timelines in which it takes to develop the user community will not be in their court. People have to see a consistent and constant commitment in act and deed before they will commit to participate in a user community. Check for People, Ideas & Objects.

These are the strengths of the Preliminary Specification in the oil and gas ERP marketplace. Producers might believe that they can more easily develop a solution for themselves that meets their needs and that our industry wide scope and scale is too broad. I disagree. If they can approach the development of software that deals with the administrative and accounting requirements of their organization. Cobble that together with their minimal budgeted resources. Minimal from the point of view they’re one producer with one budget. Think of how easily I could do the same job on behalf of the industry with our aggregated budget of all the producers. Check for People, Ideas & Objects.

The last question that we have to ask is what is the producers back-up plan? And of course that is the tired and well used, do nothing, alternative. It wouldn’t be a “muddle along” strategy without “do nothing” tagging along with it. My question is, how is it that an industry that is considered, and promotes itself as innovative, can also pride itself on its muddle along strategy and do nothing approach? What we see is nothing. There is no action for years and even decades. It's all part of the business to lose money for nine or more of the next ten years. Check for internally generated software.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Plan, Part XV

In addition to action by the oil and gas producers towards actively participating in the People, Ideas & Objects Preliminary Specification. We also need the service industry representatives to participate in these developments in order to gain the benefits for their organizations, industry and the oil and gas producers. They have just as much to gain by actively participating in these developments. Specifically, these benefits are spelled out in the Resource Marketplace and Research & Capabilities modules. It’s in these modules that the role of the service industry is fully recognized and the full capabilities of those in the field are brought to the dynamic, innovative, accountable and profitable oil and gas producers.

The role that the service industry provides the oil and gas industry is of course the field operations. If every producer had to provide for every operation that they needed, conducted at every location they operate in, the world would be congested with the producers oil and gas equipment. There is however a much more important role for the service industry identified and supported in the Preliminary Specification. And that is they have traditionally been the key innovators of oil and gas technologies. Many producers claim that they’re innovative and that they’ve moved the industry forward with the development of shale. A development that we recently noted is now twenty years in the making. Producers are not the ones that innovated and brought about these changes, it was those representatives of the service industry that are the ones that developed the technologies for the exploitation of shale. As I’ve mentioned before, the coiled tubing vendors were looking for a producer that would test their product in one of their wells for years, back in the late 1990’s. Packers Plus was forced to relocate in order to gain any traction in the industry. And now do most of their research in Argentina. I can assure you, that the only thing someone with an innovative idea in oil and gas will receive from oil and gas producers is repeated treatment with the baseball bats. The myth that oil and gas producers are innovative is about as rich as saying oil and gas producers generate real profits.

The situation is aggravated by the fact that these producers treat the service industry with disrespect and disdain. The producer, as part of a primary industry, receives revenues from the sale of oil and gas. They don’t understand that they’re not the sole earner of those funds. The service industry has been a critical part in generating those revenues and are entitled to their share. What the service industry receives from the producers however is the name calling that they’re being greedy and lazy, like what we heard when commodity prices were high. One look at the makeup of the service industry and you see that producers will only work with large established service industry representatives. They don’t work with small startups and such. As a result there are only a few companies that they’ll work with and when they scale up their drilling operations the service industry only has price as a means to deal with the higher costs of trying to complete the work. There are no opportunities for new market entrants when the producers will only work with established vendors. Then in the inevitable and unnecessary downturns, such as we’re in today, the service industry can watch their accounts receivable balloon to two years of work outstanding. If only there was a better way.

The Resource Marketplace and Research & Capabilities modules provide the producer and service industry with the opportunity to collaborate on a number of fronts. Enabling them to innovate on a much faster cycle, but more importantly for the producers, to be part of that innovation cycle. If we are to undertake the greater than $20 trillion in capital expenditures in development and infrastructure over the next 25 years we could establish ways of doing it innovatively, or we could go back and copy what they did in the former Soviet Union. Either one of those methods would appear to be a better choice than what has gone in oil and gas in the past few decades.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Third Friday Off

No posting today.

Our Plan, Part XIV

People, Ideas & Objects have a product in the form of the Preliminary Specification. And now we have a plan on how we’ll have it built to solve industry's issues. Key to that plan is the participation of our user community. User community based software is usable software with a quality that has been missing in the oil and gas ERP marketplace. Oil and gas producers also need to participate in these developments by funding them. Initially with our $100 million preliminary budget and then follow through with the funding of our full budget by August 2018. Now is not the time to question or second guess the need of the Preliminary Specification in the marketplace. Now is the time for action, and the desire to move on from the disaster that the industry has become.

Producers that choose to sit out these developments run significant risks beyond the costs of development. We have quantified the tangible value of implementing the Preliminary Specification in the industry at $25.7 to $45.7 trillion over the next 25 years. These are the incremental revenues, and hence profits, that would be earned by the industry through the decentralized production model. Revenues above the current cost base. Providing an opportunity for the industry to pay the past investors for their investments that sit as property, plant and equipment on the bloated balance sheets of the producers. Enable the industry to undertake the $20 trillion in capital expenditures that are believed to be required to maintain both the production profile and infrastructure over the next 25 years. And earn real profits as opposed to those false accounting profits that they’ve come so accustomed to reporting. These are the tangible benefits to the industry of proceeding with the development of the Preliminary Specification.

Participation has additional benefits that are intangible in nature and can only be gained by being at the table from the very start. There will be changes to the producers during development. Those producers that are part of our developments will be able to capture and realize the benefits from those changes. The results of these changes may provide significant competitive advantages to the participating producers that can not subsequently be reclaimed by the laggards. Therefore setting up these laggards to be permanently uncompetitive in the marketplace.

Participation by the producer is not passive either. The producer firm is going to have to be actively involved in the developments of the user community in order to gain the benefits of these developments. Assignment of a permanent individual on your staff will be necessary. We see this individual providing a Project Manager capability within your organization. A point of first contact for your employees to contact our user community. And a point of first contact for the user community to access people within your organization. If you want software that is going to accommodate your organization you're going to have to have some skin in the game. No one can define what it is that you want and need other than the producer itself. Our user community needs its constant input.

Producers will need to read. And when I mean producers, I mean your entire staff should review the Preliminary Specification in order to determine who is able to contribute. Everyone reviewing the entire specification will enable them to understand the direction that you’re taking your producer firm and why. There will also be the need for a stronger understanding of the underlying technologies. Java 9 will be released in August 2017 and we will be using that release as part of our solution. That along with the associated technologies around Oracle Database 12c, Oracle Fusion Middleware and Oracle Applications. We have five months before the start of our developments, not a lot of time, certainly not a lot of time to dither. We are in the midst of an Information Technology revolution, it's time for people to step up.

It’s not what People, Ideas & Objects are developing is new to the marketplace. There should be no need to think hard and long about participation. People, Ideas & Objects have been hammering about this issue for more than a decade now. We provided good comic relief when the oil and gas prices were high and the producers could completely disregard it. That’s not the case anymore. The point is, what will the future be in terms of commodity prices as a result of shale based reservoirs? We all know that each oil and gas producer runs a tight ship. There is however a collective issue that can not be addressed by the current “muddle along” business model. That collective issue is the systemic and chronic overproduction of oil and gas leading to severely depressed commodity prices. What does the immediate future hold in terms of resolving this collective issue? How will it be resolved in the mid to long term? Obstinence at this point seems to be a poor strategy.

In addition to being able to compete against those producers that may not participate in these developments. I think there is another distinct advantage to proceeding with your contribution and participation to our plan. What would the response of your bankers and investors be if they saw that you were actively participating in the resolution of the industries issues that have caused such distress? Would that loosen some of the purse strings and enable you to alleviate some of the difficulties that you’re experiencing internally? What do you have to lose?

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Plan, Part XIII

In summary then, our plan is to start software developments of the Preliminary Specification on September 4, 2017. Key to the success of People, Ideas & Objects and the future of the oil and gas industry is our user community. Our user community vision reflects clearly our commitment to user community based software developments. It is there that the power and authority is provided to the user community to enable them to make the necessary changes in the oil and gas industry, producers and associated areas. People who are interested in participating in our user community are encouraged to begin the process of preparing their application. Action on behalf of the user community participants has begun. A reflection that there is a belief that change in the marketplace is needed and the status quo no longer builds any value. People are frustrated to the point of action.

We have established a budget to fund the developments for the first year of operations. We are raising $100 million in revenue from sources that will participate in this solution. Producers,  oil and gas investors, whomever. This will provide us with 108 man years of funding to be divided equally between the user community, our developers and Oracle Corporation. The objective of the user community is to move the Preliminary Specification forward by beginning to fill out the details of what will be required. The Preliminary Specification as it stands today is a vision of what is possible. The user community will take this and in the first year build a strong framework of what is required. Defining what will be required from the user community in the years to come.

We have set the objective that revenues to fund our entire development budget will be raised by the end of this initial phase in September 2018. Continuation of the work being done in this initial phase is a critical requirement of the industry to follow through on. This initial phase enables us to jump start the developments. The danger is that if there is difficulty in raising the remaining budget, people will not recommit after a cut in funding. This is not their issue, if the industry is unwilling to follow through on the resolution of its own issues then why would anyone else? Establishment that this oversupply and overproduction issue as a material, chronic and unresolved issue over the past decade, and in the 1980’s and 1990’s, is evidence enough that action is required. Only the industry generates the revenues necessary to fund our solution and are the key benefactors of our value proposition. Only the user community controls the Intellectual Property involved in that solution.

Recruiting of our leadership team has begun with the objective that they’re in place September 2018. Positions in both the user community and People, Ideas & Objects will form our overall leadership team. These positions include the C class executives of both organizations, the approximately 20 product owners and others.

People who want to have user community based ERP systems to use in oil and gas. Now is the opportunity to act. The opportunity to resolve what can only be considered as the largest issue ever in oil and gas. A decade has been lost in oil and gas already. People can be a critical part of that solution by participating in the user community. Contributing to society by establishing a profitable, productive and prosperous oil and gas industry where the next 25 years could be the most challenging and rewarding. This is that opportunity and now is that time. No one is going to tell us to do it. We have to make this happen ourselves and deliver it to the industry. Rebuilding the industry brick by brick and stick by stick from this point forward.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Plan, Part XII

Today’s marketplace enables us to stand on the shoulders of giants in all aspects of our lives. At the same time we seem to be constrained in our ability to grow our productivity and quality of life. Is it that the economic statistics don’t capture the value that the Information Technology revolution is providing society? Or is it that we’ve reached the limits of what we can do? I believe that we’re in a fundamental remaking of society as a result of Information Technology. The issue is that we are currently constrained due to the inability of our organizations to deal with the software technologies that define, support but also constrain them. The ability for the oil and gas industry to break out of the current crisis will not happen by what has brought us to this quality of life. Spontaneous order has ceased to function when software impedes the ability of an organization to change. Therefore the industry will remain stuck as it is, as will we, until such time as we deliberately change the software in the manner that is to our benefit.

Change as an element of business will accelerate continually. Ask anyone what has changed in oil and gas and most people will answer shale. Everything else seems to be the same. Yet I can remember when I was affiliated with an oil and gas producer in 1997. The coil tubing suppliers begging us to test their product out on our wells. They could not find anyone in industry willing to risk their assets to test these new technologies. What seems new today really had its origins twenty years ago. Natural gas had their precipitous decline from their record prices almost ten years ago. The business has been in the trash since. No remedial action has been taken. No consideration of any change have been discussed. It’s just business as usual with the principles of the oil and gas producers going to church on Sunday to pray for a cold winter. All throughout this time I’m punished and banished from the industry because I suggest that we get rid of the bureaucrats. A natural consequence of the Preliminary Specification and something that is happening in every industry. Disintermediation will happen in oil and gas, one way or the other, why not be proactive about it.

At the same time the users of the systems that exist in the marketplace today place another ream of paper in the printer. Being forced to do tasks that are better off done by computers they continue to work around technical or accounting interpretations of what oil and gas is. All the while thinking why doesn’t someone do something to replace these systems and bring in ones that would be useful. Systems that would be productive and valuable to the organization. It is this kind of thinking that is once again interrupted by the fact that the printer needs paper.

If you want systems that meet the needs of the people in the industry there is only one way in which you’re going to get your hands on them. By your direct participation in the development of those systems. You might think that the last system had strong user buy-in, as far as the vendor was concerned, and you may be correct. However that user community participation didn’t have two things that the People, Ideas & Objects user community offered. The first being an overall vision of a system based on a fundamental understanding of what an oil and gas system needs to be. And a user community vision that is contained here. A vision that has control of the Intellectual Property of the software and the power to make the necessary changes as the user community sees fit.

The way things are being done in oil and gas isn’t working anymore. The financial statements of the producers are the only evidence you need to review to verify that fact. The way things are being done today are finished, it's over. How things are done in the future, and who does them, is up to us. We’ll be the ones who make the determination. The opportunity for the bureaucrats to be involved in determining what happens in the future is over. They blew it. They have no credibility, no solutions, no vision, nothing but prayers for a cold winter. Are you going to listen to them? It’s up to us and we have to act now. September 4, 2017 is just around the corner and you need to finish your application to the user community. What are you waiting for?

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.

Our Plan, Part XI

We now start the second quarter of 2017. Producers will begin the process of publishing first quarter reports, 2016 annual reports and the annual general meetings throughout April and May. It will be interesting to see how things turn out. We know that 2016 was financially more difficult than 2015. What is 2017 shaping up to be? Two companies I’ll be watching closely will be Canadian Natural and Cenovus. They have both announced multi-billion dollar deals that are so far outside of what is reasonable. These transactions may be difficult for their firms to handle. I’ll be surprised if these deals close. At $7.5 and $13.5 billion for primarily heavy oil assets this may be the best reflection that the producers will not, ever, change. They don’t see the issues in front of them and are of the belief that everything is fine.

The one fact that any of the producers can’t ignore is the amount of cash that they have. Literally no one has any. CNRL has a working capital deficiency of $1.6 billion. If I was a vendor that hasn’t been paid for the past two years I would want my money before they did that deal. You can fool some of the people some of the time. And producers have done that for four decades by not recognizing the costs of their past production. Leaving the capital costs, in a capital intensive industry, on the balance sheet in property, plant and equipment for decades. Allowing them to report profits, but in actuality they have been consuming cash by the truck load. Now that investors and bankers have cut them off, they have no source of cash and they’re all suffering. These two monster deals are evidence that the producers are completely out of control.

That these two producers think they can spend $21 billion. Money that they don’t have. On assets that will probably never be profitable under any reasonable accounting. Don’t tell me that they can’t contribute their share of our budget to build the Preliminary Specification. Our value proposition resolves the issues present in the industry and makes all oil and gas production in North America profitable. Instead of mindlessly drilling for more wells producers need to pay attention to their business. What is it that they’re doing? How are they going to make money?

One of the big difficulties producers will be faced with is how do they run a profitable operation when the Preliminary Specification is operational. Living off of other people’s money in the form of annual stock offerings, buffered by ever increasing lines of bank credit do not make for a commercial enterprise. They are far from being commercial in their mindset and operations. It is an engineering exercise oriented towards production at all costs. The key cost is the continual destruction of the commodity markets. Analyze any industry or any company in any other industry and they would not continue to produce more in the face of chronically rising inventories and collapsed prices. Why would you?

So don’t tell me our budget is too high for the producers to deal with. We provide the entire industry with the opportunity to commence profitable operations. We do this by developing software that identifies and supports a fundamental reorganization of the producer firms and industry itself. The producer becomes a stripped down version of itself consisting of the C class executives, earth science and engineering resources, land and legal, with some support staff. The remaining accounting and administration resources are reallocated to service providers who focus on one process and have the entire industries producer population as their client base. This enables what is called the decentralized production model in the Preliminary Specification. Which enables the producers to determine, based on an actual detailed accounting, to shut-in any unprofitable production until such time as the commodity prices rise, the production throughput increases, the costs are reduced or the reserves are expanded. All of the producer's inventory of shut-in production incurs what we call a null operation. No profit but also no loss. There will be no revenues, royalties, operations or overhead costs under the decentralized production model. This is achieved through the service providers billing their administrative and accounting services to the individual Joint Operating Committee, not the producer firm. If the property has no production, there will be no trigger in the Preliminary Specifications task and transfer network to initiate work by the service providers. No work will be conducted by any of the service providers on that property, and hence no billing will be issued. A null operation will be recorded at that property.

Reducing the production profile of the producer firm to only profitable production increases their profits as the producers are no longer diluted by the losses from other properties. The commodity markets find the marginal costs when the unprofitable production is removed from the marketplace. Producers reserves don’t have to carry the additional costs of the losses that they incur year after year. And finally, those reserves can be saved for the time in which they can be produced profitably. Reasonable, rational, independent decisions being made based on the actual detailed accounting of each property.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Plan, Part X

Bloomberg's Alix Steel has been publishing interviews she conducted of oil and gas CEO’s at a conference in New Orleans. Watching these videos we can see that nothing will change in oil and gas for the foreseeable future. There is a theme to all of Ms. Steel’s questions regarding the costs of production and at what point the producers would change their behavior. Repeatedly asking the producers that when their production increases, which reduces the commodity price “are they not victims of their own success” [in the field]. Continental and Newfield are the most representative of the deer in the headlights response. Upon repeated direct questioning they can’t answer at what point their behavior would change. They don’t know what their cost structures are and repeatedly quote what they’ve been told by suppliers as to what the cost will be to drill new wells, not their historical, actual, accounting costs. Don’t expect anything to happen in the industry for the next few years when you see the CEO’s behaving in a manner such as this. These performances don’t instill any confidence in anyone, particularly the investors and bankers who have concerns about their money. If the CEO’s have no answers, they have no solutions, why are they there? This may be the beginning of the wholesale exit that I predict will happen in 2017.

Once again I can criticize the producers for their inaction for the next several years. Especially based on these CEO’s who continue to fumble about. However, I am no better if I just sit here and criticize, and that is why we will commence the developments of our system on September 4, 2017. Action is required now and that is what we’re doing. People are reviewing our project and their participation in our user community.

Within our first year of developments we need to establish a foundation for a number of larger, overall objectives that need to be attained within People, Ideas & Objects and the user community. As much as we have short term deliverables we also need to look at the larger picture of what it is that we’re doing. We have to set these larger objectives in motion in our first year as well.

Stopping and restarting developments due to a lack of funding I don’t think is possible and may actually be fatal to this project. We therefore need to ensure that the funding for the remainder of the development of the Preliminary Specification, which includes the costs of the user community, is in place by September 2018. This would be an effective way in which the bureaucrats could eliminate us from consideration. Fund the short term and then cut us off at a critical point. This is the additional risk that we are undertaking by funding only the first year of developments. Oil and gas prices may be up 5% on August 1, 2018 and provide the shiny, bright object that draws the producers attention away from us. It’s a risk that we will have to take and one that needs to be more fully researched.

We are a software engineering capability that needs to be developed and supported. This capability is an enhancement to the capabilities of the oil and gas industry. As a result they will be able to deal with the changes in their business in the future in a proactive manner. Software is too important a component in the producer's business to purchase it once every decade and be constrained by its feature set. Producers need to make dynamic, innovative, accountable and profitable decisions and actions based on the ability to change their organizations by changing their software.

This last objective is related to the raising of our budget. It is also stated in our Revenue Model as to how we maintain our overall objectivity and independence. It is that we don’t ever become blind sleepwalking agents of whomever will feed us. Our role in the industry is leadership. Dynamically changing the business model of the producers as necessary. If we are relegated to a hand to mouth existence, much like the software vendors are in oil and gas today, then we will fail in our leadership role and fail in providing the software and services that the industry needs. Raising our budget is therefore critical. It is also critical that we develop the methods and means in which to deal with the changes in the industry, that the money can be secured and the user community go about their business as required. This too is a challenging task that we’ll need to be researched and resolved in the next few years.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here. 

Our Plan, Part IX

One of the deliverables that we will have in place at the end of this initial year of developments, or on September 2018, will be our leadership team. We are now searching to fill positions in both People, Ideas & Objects and our user community. There are approximately thirty positions that we’ve identified at this time that need to be filled by September 2018. These people will provide leadership and support to these organizations through their proven skills and capabilities. If you find one of these positions of interest to you by all means contact me.

The first group of leaders that we are seeking are what are known as product owners. In the agile development methodology product owners hold a special role between the developers and users. People, Ideas & Objects will have as many as twenty product owners in our development, one for each module of the Preliminary Specification with additional product owners for other areas such as the user interface, data model, Oracle Applications etc.

This definition of product owner is provided by Scaled Agile Framework.

The Product Owners (PO) is the member of the Agile Team who serves as the Customer proxy and is responsible for working with Product Management and other stakeholders — including other Product Owners — to define and prioritize stories in the Team Backlog so that the Solution effectively addresses program priorities (Features/Enablers) while maintaining technical integrity. Ideally, the Product Owner is collocated with the rest of the team, where they typically share management, incentives and culture. But the Product Owner also attends most relevant Product Management meetings about planning and backlog/Vision refinement. 

Our user community will primarily be virtual in terms of the work that they do. Attendance with our team of developers will on occasion be necessary however that will be a very small percentage of the user community members time. The product owner is the proxy for the user community and the work that is done by them. When the user community member needs contact with the development team it will be through the specific modules product owner that this is enabled. The product owner role is a senior position with significant responsibilities in representing the needs of the user community. Recall too that once the Preliminary Specification is operational within the industry the user community member will be primarily involved in the management of their service provider organization managing a process on behalf of their clients, the oil and gas industry. This will involve delivering their services and the People, Ideas & Objects software that they’ve developed to manage that process. As time passes they may want or need to make changes to the software they use and will be able to so as members of the user community.

Additionally we will be filling out the principles and officer positions within People, Ideas & Objects and user community. The user community is a separate organization from People, Ideas & Objects with its own self supporting administration and organization. This provides for their independence and enables their focus on the issues and opportunities that exist in the oil and gas industry, producers and associated areas. The user community will be established based on the Revenue Model which denotes its revenue stream. The user community will be established to provide its services in the development of People, Ideas & Objects Preliminary Specification and will not be authorized to generate revenues outside of that. We will have a dedicated and committed user community that is wholly focused on the issues and opportunities of the oil and gas industry, producers and associated firms.

The Preliminary Specification, our user community and service providers provide the dynamic, innovative, accountable and profitable oil and gas producer with the most profitable means of oil and gas operations. Setting the foundation for North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in these user defined software developments. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.